## 1. Director of the "Schaaffhausen Bank Association" member of the "supervisory board" of 33 societies!! (p. 155).

**Source:** PSS vol. 28

**p. 150:** example of 35 positions on supervisory boards in a single pair of hands... (35).

**p. 156:** ..."Alongside this expansion of the sphere of activity of individual large industrialists and the assignment to provincial bank directors of exclusively one specific industrial district, there is a certain growth of specialization among the leaders of large banks in individual branches of the economy. Such specialization is generally conceivable only with large-scale dimensions of the entire banking enterprise and its industrial connections in particular. This division of labor proceeds in two directions: on the one hand, relations with industry as a whole are entrusted to one of the directors as his special concern; on the other hand, each director assumes supervision of individual enterprises or groups of enterprises close to one another in profession or interests. For one the specialty is German industry, sometimes even only West German, for others—relations with foreign states and industries, information about the persons of industrialists, etc., stock exchange business, and so on.

||
||
||supervision|| of
the public
economy

Moreover, frequently each of the bank directors receives under his control a particular locality or particular branch of industry; one works chiefly in the supervisory boards of electrical societies, another in chemical factories, breweries or sugar beet refineries, a third—in a few isolated enterprises, and alongside this—in non-industrial societies, for instance, in the supervisory board of insurance companies. Proofs of this sort through examples of individual Berlin bank directors would lead us too far into personal matters. In a word, it is undoubtedly the case that in large banks, as their size and the diversity of their operations grow, ever greater division of labor develops among the leaders—with the goal (and with this result) of raising them, so to speak, above purely banking matters, making them more capable of judgment, more knowledgeable in matters of general industry and in special questions of individual branches of it, preparing them for activity in the sphere of the bank's industrial sphere of influence. This system of banks is supplemented by an endeavor to select into its supervisory boards or the boards of banks subordinate to it persons well acquainted with industry, entrepreneurs, former officials, especially those who served in railway and mining departments*, from whom they demand not so much connections with industrial enterprises as expert advice—advice based not so much on academic education as on long years of technical, business and human experience"... (157)...

||
||
||||||NB
||||NB
||
||
||
||||||"system"

..."But a bank director in his capacity as member of a supervisory board not only possesses the advantage that he is interested in the conscientious performance of his duty in view of his obligations before the bank: he is also better informed than anyone about the state of the market, can make his large apparatus of employees carry out the commercial-technical tasks of the supervisory board; precisely this knowledge of many societies makes it easier for him to evaluate individual ones, it protects him from the excessively high valuation of an individual enterprise, which is often observed where a private individual sits on the supervisory board of one society only" (157-158).

||NB
||
overview
of the "whole"

Large banks were represented at the end of 1903 in the SUPERVISORY BOARDS of industrial societies:
(p. 161-162)*,

|  | "Deutsche Bank" | "Disconto-gesellschaft" | "Darmstädter Bank" | "Dresdner Bank" | "Schaaffhausen Bank Association" | "Berliner Handels-gesellschaft" | Sum (mine) of 6 large banks |
|---|---|---|---|---|---|---|---|
| Through directors | 101 | 31 | 51 | 53 | 68 | 40 | 344 |
| Through their own supervisory board members | 120 | 61 | 50 | 80 | 62 | 34 | 407 |
| **Total** | **221** | **92** | **101** | **133** | **130** | **74** | **751** |
| By means of chairmanship or more than two persons | 98 | 43 | 36 | 41 | 38 | 33 | 289 |

isn't this already an extract from Riesser? Compare p. 170-171: members of supervisory boards by branches of industry... p. 137 and 139: industrial emissions

*See V. I. Lenin. Collected Works, 4th ed., vol. 22, p. 208. Ed.

..."The universal nature of banking operations in industry, as it has been described up to now, the possibility and necessity for a large bank to systematically utilize regular business transactions, the provision of industrial credit, emissions, and the occupation of supervisory board positions as an instrument for close and enduring relations with industrial enterprises—all this weaves around the bank and the industrial enterprise such a dense network that competitive struggle over individual operations with these enterprises often—and in some societies for a long time—is excluded" (163)...

|||
||||"universal
nature"
||||"dense
network"

"As a result of examining industrial connections in their entirety, we obtain the universal character of financial institutions working on behalf of industry. In contrast to other forms of banks, in contrast to requirements sometimes put forward in the literature that banks should specialize in a certain area of business or branch of industry so as not to lose ground beneath their feet—large banks strive to make their connections with industrial enterprises as diverse as possible in place and kind of production, seek to eliminate those inequalities in the distribution of capital between individual localities or branches of industry that are explained by the history of individual enterprises*. Hand in hand with this there also unfolds the endeavor to build industrial connections on regular, enduring business relations and to give them expression and the possibility of expansion and

|||
||||"universal
character"
||
||
||"in contrast"
(to the old)

*See V. I. Lenin. Collected Works, 4th ed., vol. 22, p. 211. Ed.

deepening by means of a ramified system of supervisory board positions; in comparison with these two spheres of influence, emission activity retreats relatively into the background in its significance for the industrial connections of large banks. One tendency consists in making the connection with industry a universal phenomenon; another—in making it firm and intensive; both are carried out in the six large banks not completely, but already to considerable extent and to equal degree" (180)...* 

"tendency"

"new" industrial relations to banks

"Connections between industrial enterprises, with their new content, new forms, new organs, namely: large banks, organized simultaneously both centrally and de-centrally, are formed as a characteristic economic phenomenon scarcely before the 1890s; in a certain sense one can even push back this starting point to 1897, with its major "mergers" of enterprises, introducing for the first time a new form of decentralized organization for reasons of banking industrial policy. This starting point can perhaps be pushed back even further, for only the crisis of 1900 gigantically accelerated the process of concentration both in industry and in banking, consolidated this process, for the first time transformed relations with industry into a genuine monopoly of large banks, made these relations considerably tighter and more intensive" (181)...**

"scarcely before the 1890s"

1897

crisis (1900)

*See V. I. Lenin. Collected Works, 4th ed., vol. 22, p. 211. Ed.
**Ibid., p. 213. Ed.

..."Sudden concentration in Rhineland-Westphalian mining, the formation of a steel-making association, mergers of large electrical companies, etc., undoubtedly considerably accelerated the practical solution of the question of relations between banks and industry" (182)...

after the crisis of 1900 (depression)

..."contemporary industrial entrepreneurship has displaced banks into entirely new spheres of economic life... the bank moves to a certain extent from the sphere of activity that is in principle only that of intermediary into the sphere of industrial production... ...Large banks come in this way" (through connections with industry) "into contact not only with the tendencies of development of individual enterprises, but with connections between different enterprises of one branch of industry and between branches of industry as a whole" (183)...

||||
||||
||||NB
||
||

"Whoever has observed in recent years the change of persons in the positions of directors and members of supervisory boards of large banks could not fail to notice how power gradually passes into the hands of persons who consider active intervention in the general development of industry a necessary and increasingly urgent task of large banks, and between these persons and old bank directors there develops from this a divergence on business grounds and often on personal grounds as well. The matter is essentially about whether banks, as credit institutions, suffer from this intervention of banks in the industrial process of production, whether solid principles and reliable profit are sacrificed to such activity, which has nothing in common with intermediation in the provision of credit and which leads the bank into such a sphere where it is even more subject to the blind rule of industrial conjuncture than before. Thus speak many of the old leaders of banks, while the majority of young ones consider active intervention in questions of industry as necessary as that which gave rise together with contemporary large industry to both large banks and the latest industrial banking enterprise. Only in this do both sides agree with one another: that there yet exist neither firm principles nor concrete goals for the new activity of large banks"... (184)...

transition...
to what?

|||
||||
||||
||||

1
2
3

"Banking operations with foreign countries and abroad fall into three parts, each of which corresponds to a definite stage of development: international payments, the assumption of foreign loans and participation in industrial enterprises abroad... each... has left its imprint on a definite period in the foreign policy of German large banks.

...Regarding the significance of loans for domestic industry, one of the leaders of the Discount Company, which devotes special attention to operations abroad, expressed himself ten years ago before the stock exchange inquiry commission in the following manner ("Protocols of the Stock Exchange Inquiry Commission," p. 371, testimony of Russell): "I would consider it an extremely great loss if... the placement of foreign loans in Germany were given not into the hands of German capital and German banks, but into foreign hands. Precisely because of this desire to avoid it, the Ministry of Foreign Affairs became so strongly interested—and, in my opinion, quite rightly—in our having commercial branches, banking branches and connections abroad. For only thanks to the fact that these connections exist is it possible to find desirable work for German industry abroad.

||NB
||
||NB
||
||
||

...The universal complaint of our export industry is that Germany precisely in comparison with London lags too far behind in the market of great deals. Almost all orders are concentrated in London, in this great market of the world, and only because we stand closer to individual foreign enterprises do business relations and steady work for industry arise"" (186-187)...

||
||
||NB
"orders"

..."Insofar as German large banks are engaged directly in foreign industrial enterprises, again one must distinguish two fundamentally different and also generally in time distinct stages of development. The first, when viewed historically, coincides approximately with the period of flourishing of foreign loans and therefore pertains in individual countries to different years: the 1870s and 1880s can be regarded as the time of flourishing of foreign railway construction"... (187)...

||
||
||2 stages
||||railways

2 subtypes ("opposite poles"): Romanian railways and participation in American railways.

"This first stage is characterized by close connection of activity in foreign industry with loans, although domestic industry, as supplier, can receive certain advantages in this. The initiative of banks is strong and decisive, but it is only indirectly concerned with industry, whereas the chief attention of banks is devoted to advantageous placement of capital in foreign securities. It presupposes such a situation when domestic industry is not yet so concentrated and has not yet become so capable of expansion as has been the case from the 1890s.

|||
from the 1890s

2nd stage

||
||
||

On the other hand, at the second stage external loans retreat into the background in their significance for banking activity, whereas the interest of large banks in foreign industry grows, being less dependent on other financial connections with the given country. The organization of industrial societies in other countries by large banks, or with their assistance, becomes a more frequent phenomenon, and at the same time in foreign operations there is observed close cooperation of large banks with domestic industry" (188)...

|||
|||
|||

..."If they (domestic enterprises) in their penetration abroad are much more dependent on banks than in their domestic factories... then on the other hand" (in contrast to their own country) "abroad the bank is already at home, has its own branches, dominates in international payment circulation, stands, perhaps, in definite connection with the government of the country, thanks to the organization of loan issues" (189)...

4 forms

"One can distinguish four forms of participation of banks in foreign industrial enterprises: 1. The foundation of branches or subsidiary enterprises for domestic industry...

..."2. The foundation... of individual foreign enterprises connected with domestic industry only by weak ties or not connected with it at all... But the actually characteristic case consists of the latest exotic railway undertakings and East Asian enterprises of large banks participating jointly in the "Deutsch-Asiatische Bank"... This is already "a link in the conquest of an economic sphere" (190).

|my emphasis
(Baghdad, China etc. colonies)

..."3. The third group is formed by the attempts of large banks to secure for themselves a place in some branch of industry abroad by means of establishing their own enterprises, and often also merely by participation in existing ones"... (191) participation in South African mining societies ("Deutsche Bank" from 1894, etc.).

4. ..."the German banking world also attempted to secure for itself or for the German capital standing behind it some branch of industry abroad for its own exclusive exploitation" (192)... for example, efforts to "organize a part of the kerosene industry, with Romania in the center, under its hegemony"...

|||
|||
|||create "its own" industry

..."The kerosene market of the world is even now divided between two major financial groups: the American "Standard Oil Company" of Rockefeller and the owners of Russian Baku oil, Rothschild and Nobel. Both groups stand in close connection with one another, but their monopoly position is threatened, for the past several years, by five enemies"

|||
|||division of
the world

(1) exhaustion of American oil sources
(2) the firm Mantashev and Co. in Baku
× (3) oil sources in Austria*.
× (4) idem in Romania
× (5) overseas oil sources, especially in Dutch colonies (the rich man Samuel and the firm "Shell Transport and Trading Company")*.

|
|————|
|
× = participation of "Deutsche Bank" and other German banks.
————

..."Banks are prompted to activity abroad not by national enthusiasm, but by the increasingly growing, at a certain stage of contemporary capitalist development, necessity to create for free German capital abroad a favorable sphere for investment" (197)...

elementary truth

technical role of large banks (financial capital)

"Banks play a similar role" (assistance to industrial enterprises) "by creating research technical societies, the results of which should benefit friendly enterprises. This includes, for example, the society for the study of electric high-speed railways, as well as established by the Loewe concern "Central Bureau for Scientific-Technical Research" and the Central Bureau of Mining, a limited liability company in Frankfurt-on-Main, which alongside large industrialists is financed by first-class banks" (210-211)**.

Sometimes banks bring different industrial enterprises closer (sometimes leading to cartels, sometimes serving to specialization, etc.)—

*See V. I. Lenin. Collected Works, 4th ed., vol. 22, p. 236. Ed.
**Ibid., p. 212. Ed.

..."The bank embodies in a certain way the internal connection, which with the growth of large industry is created among a large number of enterprises, it represents the existing community of interests between them" (215)...

bank = "internal connection" among enterprises

..."What rich opportunity to provide work to enterprises friendly to it such an undertaking as the Baghdad Railway gives to "Deutsche Bank"!" (217)...

"Although the bringing together of different enterprises and branches of industry by means of providing orders when occasion arises has up to now been done by banks "in passing," nevertheless it is a significant symptom of how with the growth of large industrial production connections become ever more numerous, but also ever more complex and incomprehensible. Connections and relations of interdependence between different branches of industry and enterprises find in large banks an organ in which they receive expression, and the hidden connection increasingly becomes actual cooperation" (219)...

NB

growth of connections

Complaints are heard of the "terrorism" of banks—(219-220)—they oblige (for orders, etc.) to have dealings with a certain firm (220).

((!!

In the electrical industry the crisis (evidently 1900) played a special role, and banks accelerated, hastened the death of comparatively small enterprises, their absorption by large ones (p. 230-232). ..."Banks withdrew the hand of help precisely from those enterprises which needed it most, causing thereby first a frenzied boom and then hopeless collapse of those societies that were not sufficiently closely connected with them" (232)*.

banks and enterprise collapses

*See V. I. Lenin. Collected Works, 4th ed., vol. 22, p. 234. Ed.

NB

|¯¯ details about electrical industry uninteresting. See more recent in "Die Neue Zeit" ¯¯|

The Loewe Group.

In 1869 the sewing machine factory Loewe was founded, manufacture of weapons was added, then (70s and 80s) artillery, boilers, etc. and so forth, then electrical industry, subsidiary companies etc. [described not very successfully by Eidels].

In the section on the relation of large banks to cartels (253-258) the author somewhat "spread himself thin," scattered himself. He distinguishes 4 forms: 1) indifference (to unimportant cartels); 2) "unconditional interest" (254) in cartels like the coal one (in cartels which are "questions of life" for the given industry);

what is the difference from № 2?

not "unconditional interest"?

3) "assistance" to the cartel, for instance, the steel-making one,

(4) purely "banking-business relation"—establishment, for example, of a "syndicate office" at the "Schaaffhausen Bank Association" (1899)...

258-265: description of concentration in coal industry (Thyssen and others). See better and more recent from Werner from "Die Neue Zeit," 1913, in another notebook*.

265 and following, electrical industry (see from "Die Neue Zeit"**).

"The highest principle of banks in this is first of all conscious assistance to concentration, to which they had already indirectly assisted previously by means of financial support of successful enterprises" (268)...

"transformation"

"The transformation of the industrial policy of large banks from the policy of a credit institution into the policy of industrial concentration clearly reveals a triple contradiction in the development of contemporary banking" (268)...

1)..."The fact of progressive elimination of competition between large banks" (269)...

*See notebook "α," p. 7-9 of the present volume. Ed.
**See the present volume, p. 313. Ed.

2) "Decentralization" of banks (local branches and connection with provincial banks) leads to "growing consolidation of capitals, uniting bank and industry into a single whole"...

3)... "growing concentration means more purposeful organization"... (270)

"By means of the extension of productive combination, various directions of which are observed in electrical and large metallurgical industry, the sphere of this consciously directed production can be significantly expanded, and in this undoubted movement large banks are an important factor" (270)...

At the same time a tendency especially to favor heavy industry (coal and iron) at the expense of others...

"The striving of large banks toward concentration and purposeful direction of industry is contradictory when it is limited to certain branches of industry and thereby leads in the remaining branches of industry to even more acute lack of planfulness" (271)*.

NB

The End

*See V. I. Lenin. Collected Works, 4th ed., vol. 22, p. 237. Ed.